Contact Your Lender Immediately

Many people avoid calling lenders about money troubles because we:

1) Feel embarrassed discussing money problems with others.

2) Believe that if lenders know we are in trouble, they will automatically rush to a collection agency or foreclosure (seize property for failure to pay a mortgage debt).

But lenders want to help borrowers keep their homes because:

1) Foreclosure is expensive for lenders, mortgage insurers and investors.

2) HUD and private mortgage insurance companies and investors like Freddie Mac and Fannie Mae require lenders to work aggressively to help borrowers facing money problems.

Lenders have workout options (choices) to help you and:

1) These options work best when your loan is only one or two payments behind.

2) The farther behind you are on your payments, the fewer options are available .

Don't assume that your problems will quickly correct themselves:

Don't lose valuable time being overly optimistic.

Contact your mortgage lender to discuss your circumstances as soon as you realize that you're unable to make your payments.

Look forward to your lender being willing to explore many possible solutions, without guaranteeing any one particular solution.

Finding Your Lender

Check the following sources to contact your lender:

Your monthly mortgage billing statement

Your payment coupon book

Information to have ready when you call:

Your loan account number

A brief explanation of your circumstances

Recent income documents:

+ Pay stubs

+ Benefit statements from Social Security, disability, unemployment, retirement, or public assistance

+Tax returns or a year-to-date profit and loss statement, if self-employed

+A list of household expenses

Expect to have more than one phone conversation with your lender. Typically, your lender will mail you a "loan workout" package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully and return them to your lender quickly. Your lender will review the complete package before talking about a solution with you.

Foreclosure Q & A

Question: What is foreclosure?

Answer: Foreclosure is a legal process in which the rights to a property is taken away from the owner and the property is then sold to satisfy unpaid mortgages and liens against the property.

Question: When do foreclosure proceedings start?

Answer: In most cases, foreclosure proceedings are started when payments become delinquent.

Question: How many payments can I miss before my lender puts my property is in foreclosure?

Answer: It depends on what type of loan you have. Your mortgage contract should state how many payment you can miss before a Notice of Default is filed and sent to you.

Question: Who can foreclose on my property?

Answer: Mortgage holders and other lien holders who have a vested interest in loans on your property, which is used as collateral, can foreclose on you.

Question: What about tax liens?

Answer: A tax sale can take place if you get behind on your property taxes. The tax sale can be initiated by federal, state or local taxing agencies.

Question: From the time I become delinquent on my first payment, how long does it take to complete the full foreclosure process?

Answer: Different types of loans have different time frames. The foreclosure process for FHA and VA loans usually take longer than that for Conventional loans.

Question: How will I know when the foreclosure process begins?

Answer: Once foreclosure proceedings are initiated, a Notice of Default will be recorded at the County Recorders Office in the county in which the property is located and you will be notified by regular mail and by certified mail.

Question: How much time do I have after a Notice of Default is filed?

Answer: Normally, it is ninety days plus twenty to twenty five days for publication. But it would be wise to read all correspondence carefully, and or contact an attorney, to make sure what your rights are and what the time frame is in your situation.

Question: Can I stop the foreclosure sale?

Answer: Yes. You can bring your mortgage payments current along with all late charges, foreclosure fees, taxes, and insurance premiums.

If you are unable to do so, you can contact your lender and try to negotiate a plan to modify your payments but don't wait until the last minute to do this. Other options include refinancing, selling your home and or filing for bankruptcy.

Question: If I file bankruptcy, how will that help me?

Answer: Bankruptcy will stop the foreclosure proceedings and give you time to work out a plan through the courts.

Question: If I lose my property through foreclosure, can I get any money from the foreclosure sale?

Answer: Yes. But first, any remaining balance on the mortgage will be paid along with all outstanding property taxes and court fees. In most cases, very little, if any money, will be left for you to get.

Foreclosure Timeline

In general, the mortgage company will start the foreclosure process about 3-6 months after the first missed mortgage payment.

A few weeks to a few months after the foreclosure is filed, the sheriff sale will be conducted at the county courthouse. Again, homeowners can get this postponed for a while, if they are working on a solution to save the home.

After the sheriff sale, eviction process may begin right away. If this is the case, it can be another 2 weeks to a month or so between the sale date and the eviction date.

Another possibility is if the state law allows for a redemption period, which is extra time after the sale that homeowners can work to keep their homes. During the redemption, they can try refinancing, selling, or paying the loan in full some other way, and keep the home in their names. After the end of redemption, though, the eviction process will start and it will be a few weeks after that that the sheriff shows up to remove everyone.

Trustee Sale

The sale is conducted by the lender's representative at the scheduled time and date. The high bidder must immediately pay the full winning bid amount by cash or certified check and receives a trustee's deed once the sale is completed. The lender will usually bid on the property for the amount of the due loan balance plus costs. Ownership of the property reverts to the lender if there are no other bids.

The lender cannot sue the borrower for a deficiency judgment, and the borrower has no right of redemption after the sale of the property.

Cash For Keys

A "cash for keys" option is something your lender may offer after the foreclosure process is complete. If you have exhausted all of your options and saving your home is no longer possible, your lender may offer you a fee to walk away from the home peacefully. Unless your lender offers this automatically, this is something that will need to be negotiated with them. In general, lenders will offer about 1% of your home's value if you are willing to walk away quickly and peacefully. If your lender does not make you this offer, then you should contact them yourself and try to negotiate this deal.

Methods To Delay Eviction

Eviction

To begin the eviction process after a foreclosure sale, an “unlawful detainer” lawsuit is filed in Superior Court. After the lawsuit is filed, the tenant will be served with a copy of the formal complaint. They have 5 days to file a written response to the complaint with the court. If they respond to the complaint it is considered a ‘Contested Case’ as they are responding or contesting the lawsuit and a hearing date will be set. If they don’t respond within 5 days, it is considered an “Uncontested Case’ and a judgment is automatically filed against them.

Answer to Complaint

Simply by answering the complaint, the process will be delayed up to 20 days, or until the trail date. So they have the initial 5 days after being served, up to 20 days waiting for the trial, and then they’ll be issued a ‘5 Day Notice to Vacate’ so they’ll have another 5 days after the judgment is entered against them to vacate. This delays the eviction by up to 30 days.

Motion to Quash

In a ‘Motion to Quash’ the defendant will claim to the courts that the summons and complaint was not served properly and ask for the case to be dismissed. The obvious point here is how did they know about the complaint if they weren’t served. These motions are typically dismissed and the judge will order the defendant to file an answer within 5 days. This delays the evictions by about 10-12 days.

How To Stop Foreclosure